Reynolds American Inc. (RAI - Analyst Report) is geared to cement its position in the e-cigarette category with the nationwide distribution of its flagship e-cigarette brand Vuse beginning Jun 23.
Vuse received favorable response since its launch in 500 stores in Colorado in Jul 2013 and gained major market share in Utah where it was launched earlier in this year. Reynolds launched the brand in two varieties — Vuse Solo and Vuse System.
Vuse is a “digital” cigarette as it is fitted with a proprietary computer chip modulating its performance. The chip delivers consistent flavor giving Vuse an edge over other e-cigarettes.
The Vuse Solo includes a flavor cartridge, which comes in two flavors — original and menthol —, a rechargeable Vuse power unit and a USB charger. Moreover, the depleted cartridges and power units can be returned to Reynolds Vapor Company through a prepaid mailer available at the online shopping site of the brand.
In order to facilitate smooth distribution, Reynolds’ two subsidiaries — R.J. Reynolds Tobacco Company and R.J. Reynolds Vapor Company — entered into a service agreement last month to gear up the production of e-cigarettes within the next four years.
To support the increased supply, Reynolds has announced the expansion of its manufacturing facility to Tobaccoville, NC. In addition, Reynolds is planning to install high speed, next generation e-cigarette manufacturing equipment at the facility. Reynolds is set to hire 200 positions this summer for the facility and will pay, on an average, more than $40,000 a year till 2018.
The Zacks Rank #3 (Hold) company currently manufactures Vuse at a contractor’s facility in Kansas, which it intends to keep along with the new one for future use.
Other Stocks to Consider
Other stocks worth considering in the retail/supermarket segment are Coty Inc. (COTY - Snapshot Report), The Kroger Company (KR - Analyst Report) and Ingles Markets, Incorporated (IMKTA - Snapshot Report). While Coty sports a Zacks Rank #1 (Strong Buy), Kroger and Ingles Markets carry a Zacks Rank #2 (Buy).